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Friday, April 15, 2011

Be Like This Guy: Mark Cuban

I’m not sure the wine posts are really right for this blog, so I think I’m going to (mostly) relegate them to my upcoming wine blog. I’ll be sure to announce that site here as soon as it’s launched—needless to say, I’m excited about it!

I decided to try to do a regular feature in its place. For now, every Friday, I’m going to do a case study of someone that I admire, or who is at least doing something extraordinarily well. These case studies will be punctuated with lessons that can be learned from their life. I call it “Be Like This Guy (or Girl).”

I thought that a natural first profile would be a guy that I’ve admired for a long time for numerous reasons: Mark Cuban.

Mark Cuban started his first business (selling plastic bags) when he was 12 years old. As a student at Indiana University, he bought a bar in Bloomington his senior year, which was shut down after the cops discovered that a sixteen-year-old won a wet t-shirt contest one night. Cuban claims to have reviewed the girl’s ID personally ahead of time, but whatever the case, Cuban was left without a job, in the eyes of many a failure at the ripe old age of 20.

After graduating from IU, Cuban moved to Dallas, where he lived on the couch in a small hovel of an apartment with five other guys. He finally was able to convince a local business, Your Business Software, to give him a job after he answered one owner’s question, “What would you do if a customer comes in and you don’t know the answer to his question?” with “I’d look up the answer in the manual and tell him.”

The job entailed selling computer software that Cuban had never used before; he didn’t even own a computer. What he did have was access to all of the software manuals, so he started reading all of them in his spare time. In this series of posts on his blog, blogmaverick, Cuban notes that he still partied hard with his buddies, but because he generally drank tons of cheap champagne, his devastating hangovers the day after kept him confined to his room, going through these manuals. After a while, he began to develop an expertise with the software that he sold that even experienced users couldn’t match—after all, who reads the manual, anyway? Cuban began to collect regular clients, and became a trusted salesman.

As his career began to take off, Cuban moved to a three-bedroom apartment with two other guys. He was pumped that he had a room to call his own. Cuban continued to increase his client list, until one day he was faced with a decision: be at a potential client’s office at 9:00 am to close a huge deal, or open up the storefront. Obviously, Cuban called another employee to open the store and went to close the deal. The next day, he approached the owner with the big check from the deal (not one of those big novelty checks from a golf tournament…you know what I mean!). The owner told him he was fired.

Instead of wallowing in self-pity, Cuban packed up his car with a couple of buddies and went on a road trip to Galveston to party for a few days. When he returned home, Cuban decided to go into the software business on his own. He called every client in his rolodex. Most just wished him well; there were only two serious leads. One of these leads was Hytec Data, a company run by his future business partner, Martin Woodall. Cuban not only got Hytec’s business, but he also got space in their office and his own phone. He still didn’t have a computer, but Cuban didn’t let that stop him from growing MicroSolutions, Inc. into a company that was eventually sold to Compuserve in 1990 for $6 million. He continued to read as much as he could. Cuban famously wrote that even though he was poor, $20 for a book was a small price to pay if he even got one good idea out of it. Most people, Cuban said, didn’t take the time to read all of the information out there on a topic and truly develop an expertise. Those that are willing can usually find something that has been overlooked by other people—an opportunity to create real value.

The big sale to Compuserve is usually where the “and he lived happily ever after” moment kicks in, but Cuban wasn’t done yet. His old college buddy, Todd Wagner, and he were fascinated by the burgeoning potential of the internet, and specifically how they could translate that potential into being able to listen to basketball games online. After starting with a single server and an ISDN line in 1995 as Audionet, the company became Broadcast.com and by 1998 it had grown to 330 employees and $13.5 million in revenue. In 1999, at the height of the dot com boom, Cuban and Wagner sold Broadcast.com for $5.9 billion in Yahoo! Stock.

And Cuban still wasn’t done! He had loved basketball from a very young age, and decided to purchase the perennial doormat Dallas Mavericks. Cuban’s passion for the game shone through, as he frequently came to the defense of his players in interviews and on the sidelines, usually racking up a hefty fine from the NBA. This passion alone couldn’t transform the moribund franchise into a perennial contender. Cuban commissioned special, high thread count towels that were the envy of all of the players in the league. He refitted the team jet to something more luxurious than any other team at that time. He changed a lot of little things that added up over time to create an atmosphere that players enjoyed, and attracted free agents to his once-horrific squad. Now, the Mavericks, led by Dirk Nowitzki, are a perennial playoff team.

Cuban has since gone on to start or buy numerous other businesses, including HDNet, Landmark Theaters, and RedSwoosh, an internet media delivery company. He continues to own the Mavs, and lives with his wife, Tiffany, and three children in his palatial (22,000 sq. ft.) Dallas estate.

Lessons

Because this isn’t just intended to be another Mark Cuban biography, what are some of the lessons you can take away from Cuban’s story?

-He always knew he wanted to be an entrepreneur, and took affirmative steps to make it happen.

Whether it was plastic bags, the short-lived bar, or his various computer ventures, Cuban knew that he wanted to be his own boss from an early age. He wrote in an interview on his blog, “To retire by the age of 35 was my goal. I wasn’t sure how I was going to get there though. I knew I would end up owning my own business someday, so I figured my challenge was to learn as much as anyone about every and all businesses.” That takes us to point number two:

-He viewed whatever job he had as valuable experience. He knew he wanted to start a business, but didn’t know what business he wanted to be in. Even when he got a random job, he did his best to learn the business and try to understand how it worked, and how it could be improved. I certainly value my time in the law, but I think this is one big reason why I got out when I did: I didn’t necessarily want to be in the law business for the rest of my life, so I wanted the opportunity to learn another industry by working in it before I became just “a lawyer” for the rest of my life. We’ll see how it goes.

-He wasn’t afraid to fail, learned from failure, and moved on. Cuban’s club was shut down. He was fired from the software store and other regular jobs he held. His first employee at MicroSolutions stole over $80,000 from the company. Each time, though, instead of wallowing in self-pity with a “woe-is-me” victim, bitcher mentality, Cuban went out and did something about it. Namely, he went to Galveston and got wasted. Well, that too, I suppose, which actually is important. Even when he was partying with his buddies, though, it was an important way for him to relax and keep things in perspective. After blowing off some steam, he went on to start two wildly successful companies.

-He learned as much as he possibly could about his industry. Then he learned more. I can’t imagine anything more boring than reading computer software manuals in your spare time, but I’ll be goddamned if Cuban didn’t sit down and read every one of those fucking things. He even went so far as to read the instruction manual for DOS. Read that sentence again. Cuban thought it was great—he viewed that as time spent acquiring a skill, gaining knowledge that he could eventually put into practice. Seems to have worked out okay for him. Even when you have to put in time to do something unpleasant for whatever business you’re in, view it as doing something that the vast majority of people are too lazy to do. You’d be amazed how quickly these “legs up” add up.

-He provided value in his successful ventures. Whether it was being the most honest, knowledgeable software vendor in Dallas, or creating the technology to be able to stream audio of basketball games online, Cuban identified products or services that people wanted and needed, and brought those products and services to the public. It’s easy to get caught up in the idea phase of being an entrepreneur without giving much thought to how this product or service is going to actually help people. Will it save them time? Will it save them money? Will it provide information they don’t have? What product are you selling? Will people pay for it? These are the questions you should be asking yourself before starting any entrepreneurial venture.

-When he became hugely successful, he had some fun. Cuban worked extremely hard. At one point, he didn’t take a vacation for 7 ½ years. But once he made his billions, he diversified his holdings and followed through on a dream of his. Similarly, one of my dreams is to own an NFL franchise. I don’t know if I’ll ever be as successful as Mark Cuban, but seeing a guy like him succeed at least gives me hope for the future. And even if I don’t achieve that level of success, even if I only get 1% of the way there, that’s still a very, very comfortable lifestyle that would be envied by billions of people on this planet. Besides, who needs $2.8 billion, anyway? $1 billion would be just fine.

2 comments:

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